Energy and Water Minister Silvan Shalom has opened a front against one of the most powerful unions in the market: The Israel Electric Corporation • Shalom: We'll have to lay off some 2,000 employees."

Mati Tuchfeld

Energy and Water Minister Silvan Shalom

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Photo credit: Lior Mizrahi

Following reforms that broke up the telecommunications industry which introduced competition, and moves to diversify ownership in the nation's ports, the government is getting ready to tackle the next major industry: the Israel Electric Corporation.

Energy and Water Minister Silvan Shalom (Likud Beytenu) began working on electricity reforms, which would mean 2,000 layoffs, an end to free electricity for employees who remain in the company, and a new professional body to oversee diversification of the market -- diverting electricity from the public corporation to private distributors. The reform would lead, according to Shalom, to lower prices for the individual consumer.

Speaking with Israel Hayom, Shalom also said that exports of Israel's natural gas would be significantly reduced.

According to Shalom -- the energy and water minister has served on the IEC Board of Directors - "When I began in my capacity, I discovered that the [electric] company has 76 billion shekel in debts (~ $21 billion). That is an enormous sum -- it is almost unbelievable. A commercial company would have needed to fire, immediately, the board of directors and management, and investigate what had happened."

"Reforming the Electric Corporation is a necessary step," Shalom said. "I started conversations with employees and with the company, and of course Finance Ministry Accountant-General [Michal Abadi-Boiangiu] and with the electricity authorities, and when we are finished, we will formulate a real reform that will offer essential solutions to the electric corporation's present situation. The reform will include a reduction in manpower. We will have to lay off some 2,000 employees. We will also put an end to the free electricity they have received for decades now."

Another element of Shalom's reform would establish an independent body to determine at any given moment where electricity should flow according to household needs, whether from public or private distributors. In this way, Shalom said, the government would be able to maintain competitiveness in the market, and prices should drop.

Another important element of Shalom's energy reforms covers the issue of Israel's off-shore natural gas reserves. Shalom said that the country would export significantly less natural gas than the Tzemach Committee -- established to examine the government's natural gas policy -- had determined.

According to Shalom, despite the generous tax revenues that the government could collect from exporters, the state ought to hold onto the natural gas in Israeli territory. Shalom said he saw real national value in that, for the future's sake.

The IEC's workers union responded to the government's plans for the electricity company last Wednesday, when the Knesset Economic Affairs Committee met and discussed the energy reforms. The IEC said it was not opposed to the government's reform, but preferred a "unified position," accusing the government of finding it "more convenient to incite against" the electric company, according to the Tashtiot website.